Wednesday, January 12, 2011

Illinois Stuck on Stupid

Money Quote:"We're saying to the people of Illinois, 'For eight years we've overspent, now we're going to make it your problem,'" said Rep. Roger Eddy. "We're making up for our mistakes on your back."

Well done Illinois, welcome to the fiscal death spiral. Everyone knows when you are in financial trouble you follow the tried and tested method of taxing and spending your way into prosperity. In no way is that crazy and there is absolutely not a myriad of examples of the end game of this strategy.

I touched on this in the previous post on the topic but why on Earth would anyone start a new business in Illinois right now? Corporate and private income taxes skyrocketing while E-commerce taxes takes the state out of play for one of the easiest arenas for new businesses. I am the tax payer they want, or will be when I start working again and I am having a really hard time justifying staying in the state where I have spent the majority of my life. This situation is only going to get worse, this, like every other tax increase, will not bring in the revenue it is projected to bring in and the fiscal insanity of the public sector salaries, benefits and pensions are not being addressed by anyone (except Rahmbo, Christ, good for him) so they are just going to need more money down the road which will lead to more punitive tax hikes and so on and so forth.

This brings me to my larger point. It is in vogue to call yourself fiscally conservative and socially liberal, or, even better, libertarian. People love to straddle the line and appear to be cultured and the best of both worlds. We saw this most prominently in the 110th Congress with the "Blue Dog Democrats." Allegedly conservative on issues such as Abortion, Gun Control and spending, these Democrats rode the wave of disgust against Bush into offices representing traditionally Republican districts. The problem is, when push came to shove every one of these Blue Dogs toed the Pelosi line on every major vote. From bailouts to Stimulus to Health Care they rubber stamped the most liberal pieces of legislation imaginable, which is why after the recent election cycle, Blue Dogs went from being a myth to being extinct.

This was also a factor in the Illinois gubernatorial race. Brady lost to Quinn due largely to a nasty campaign run by Quinn over the issue of abortion. I know multiple people that identify as fiscally conservative and socially liberal that said that Brady's pro-life views were the reason they voted for Quinn. People can vote however they want (restricting the vote to only people who pay taxes and or have served in the military is another topic) but this seems inane to me. Even if every Republican in the state office was on the same page as Brady (they aren't) there would be no way he could change the current laws on abortion in Illinois because the Democrats control both houses in Springfield, as evidenced by their passing these taxes hikes without a single Republican vote.

Basically people have to decide on one thing or another. The disagreement with one candidate on one issue that the candidate, if elected, will not even be able to change from the status quo is enough reason to vote for someone who is promising to lead your states economy down the primrose path to fiscal insanity. How is this a moderate or even handed position?

Oh and Illinois Democrats? Yeah, don't count all that new money just rolling in. Behold what Oregon's massive tax increase did for the state's coffers.

In 2009 the state legislature raised the tax rate to 10.8% on joint-filer income of between $250,000 and $500,000, and to 11% on income above $500,000. Only New York City’s rate is higher. Oregon’s liberal voters ratified the tax increase on individuals and another on businesses in January of this year, no doubt feeling good about their “shared sacrifice.”Congratulations. Instead of $180 million collected last year from the new tax, the state received $130 million. The Eugene Register-Guard newspaper reports that after the tax was raised “income tax and other revenue collections began plunging so steeply that any gains from the two measures seemed trivial.”
One reason revenues are so low is that about one-quarter of the rich tax filers seem to have gone missing. The state expected 38,000 Oregonians to pay the higher tax, but only 28,000 did.